Monday, January 3, 2011

Protests Will Continue the Upward Trend in 2011

As 2010 is now officially in the books, one issue that we can expect to continue its trend in 2011 is contract protests. An interesting piece in the November-December 2010 Defense AT&L magazine discussed this issue, and illustrates the realities of the federal contracting environment. Mainly, budgets are tightening, competition for those shrinking dollars is ferocious, and protests have become standard operating practice.

A general impression of respondents was that protests have become more common; with nearly 70 percent saying pro- tests were either somewhat, or much more common. A striking result was that none of the respondents felt protests had become less common. That agrees with a recent Government Accountability Office (GAO) report that in fiscal year 2009, 1,989 protests were filed, a 20 percent increase over the 1,652 protests filed in fiscal year 2008, and up 50 percent over fiscal year 2006.

This article is telling in many ways, but what really is of interest are the responses, and their subsequent rankings. Ranked most important is that the protesting company expects to win, followed by the government making mistakes. This certainly seems to make sense, and is also consistent with what I have experienced. In talking to small business executives, it seems that protests are a valid way to verify if source selection procedures were followed. We have seen that go awry in the Air Force KC-X tanker program, where government officials were publically called out for not following their own procedures.

Also of interest is that the order of why protests are lodged in the first place does not seem to make sense, or is not what is experienced in reality. Respondents overwhelmingly stated they expect to win the protest, but the second reason is the critical to the analysis. Some executives I have spoken to tell me that protests are now becoming more operational policy, especially for large dollar contracts. Under the current environment, why not?

The current environment encompasses the second part of the article, where the real views of protests are on display. Predictably, shrinking opportunities and increased competition are major factors at stake, not to mention governmental factors of poorly trained acquisition workforce and poor government communications. So what to do?

I have discussed the need to rethink the protest process and why they occur here and here. As I received some pretty interesting feedback, mostly negative from industry, let me reiterate that protests are a legal and necessary tool to ensure fair competition and correct procedures for awarding contracts. However, this Defense AT&L article highlights why I think protests need to be rethought in regards to acquisition reform.

What I have an issue with is the seemingly endless cycle of protests with no consequences or accountability, both by government and industry. Industry can delay award of a contract, expect quid pro quo, or simply attempt to dig up dirt where none exists. I have been on both ends of this equation, and these strategies only help waste time and money for everybody, not to mention the user pays the price in continued loss of capability (again, look at the KC-X program). Industry looks at in terms of return on an investment, since the risk adverse nature of government may provide additional revenue sources of further opportunities to compete. Nonetheless, the government does make mistakes and should be held accountable.

The end result is that there needs to be a measure of accountability on both sides. A protest should not be taken lightly, as it is normally a disruptive and costly matter. The survey confirms that a company filing a protest expects to win, but reality states that sometimes that is not the case. Firms sometimes file protests to see what happens. I have seen this too many times to count. What if a firm losses, especially repeatedly? A measure of financially accountability to recoup costs for firms that take this approach is needed. Being accountable for phising expeditions should help the protests process be used for what it is intended: ensuring fair competition.

The government seems to also be in the habit of not wanting to deal with a protesting firm, as some government agencies award work to companies with reputations for protesting contract awards to avoid the cost of resolving disputes with those companies if the government losses and the cost of resulting project delays.

Leadership and accountability is needed to help stem this trend. Protesting is a right that industry must continue to have, but it needs to be measured and weighed against the “real” costs should accountability finally be placed into the equation. Further, government must stem the tide of allowing themselves to be bullied, but more importantly, be held accountable for following procedures, and executing sound acquisition strategies to ensure a protest is not even in the conversation.

We shall see what reform lay ahead, but we can only expect to see a continued rise in protest actions on the horizon, to the detriment of all involved.

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.